In a year of widespread layoffs and uncertainty, it's wise to strengthen your finances before spending on expensive stuff. Here is what finance experts have to say.
Park the bonus before spending it
Financial advisers suggest treating this year's Diwali bonus as a buffer rather than disposable income, given layoffs, inflation and flat markets. Ajay Pruthi of PLNR, a Sebi-registered investment adviser, said the bonus should be viewed as severance paid in advance. He recommended parking the entire amount in a fixed deposit for a month, arguing that a 30-day gap filters out most impulsive decisions at no cost. Abhishek Kumar of SahajMoney, also an RIA, suggested a sweep-in fixed deposit or liquid fund to avoid festive-season EMI traps and impulse buying.
Why the cooling-off matters
The pause is aimed at employees who have already earmarked the money for multiple purchases. Advisers note that a ₹2 lakh bonus against monthly household expenditure of about ₹70,000, including EMIs, equals roughly three months of breathing room. In a year of job uncertainty, they suggest a 12-month emergency fund, with single-income households and those in sectors facing layoffs targeting nine to 12 months. The conventional six-month corpus should be treated as a floor, not a target. Emergency money should stay in accessible, low-risk instruments such as liquid funds, arbitrage funds or fixed deposits, not long-tenure deposits or market-linked products.
Debt, insurance and spending
On debt, advisers favour sequencing over blanket prepayment. Credit card dues and high-interest personal loans should be cleared first, since their interest cost typically exceeds reliable investment returns. Pruthi cautioned against rushing to prepay home loans amid job uncertainty, noting banks do not refund prepaid EMIs after a job loss. Kumar suggested considering partial home loan prepayment only after expensive debts are cleared and where floating rates have raised borrowing costs.
Advisers also warn against using the bonus to buy a market dip, since regular SIPs already invest through declines. They flag the risk of losing employer-provided health cover along wi…
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